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Exploring a Mortgage Loan Officer Job


If you are thinking about a career in the mortgage industry as a loan officer, the following information should provide you with some background details about what to expect from this career choice.

The job of a loan officer is to educate and guide borrowers into a mortgage that accomplishes their financial goal, and then provide support for moving the loan process to a completed transaction. A typical day involves talking to potential borrowers on the phone, or in person, conveying how they can provide a mortgage with competitive interest rates, closing costs, and funding in a timely manner.

Once a borrower decides to choose a particular company, the loan officer begins by completing an application with the borrower, collecting copies of the required documentation, and confirming that the borrower fits into the qualifying guidelines based on credit, employment, debt ratio, and the preliminary loan to value. The file is submitted to a loan processor, who opens escrow, orders a title report, and sends out disclosures and requests for employment and other verifications. The loan officer usually orders an appraisal, and follows up with the borrower for any necessary paperwork. The loan file is then submitted to an underwriter, who either approves, or declines the mortgage. Approvals typically have conditions that the loan officer and processor are responsible for getting signed off. An appointment is made for the borrower to sign their loan documents, and the loan is set up to fund and record after all of the underwriting conditions have been met.

There are two general categories for loan officer positions, either as a company employee, paid on a W-2 tax form, or as an independent agent, paid on a 1099 form:

Advantages of an employee loan officer may include: health insurance benefits; a retirement plan; possible base salary; sales commission or bonus pay; the company pays half of the social security tax; the company usually provides advertising or mortgage leads; and opportunity for promotion.

Some possible disadvantages of an employee position can include: having a strict, or bureaucratic structure; work activities, computer time, and phone usage may be monitored by management; a monthly sales quota must be maintained; and being anchored to an office cubicle every day.  

There are a number of mortgage companies who will work with loan officers on a virtual, or net branch basis, to provide the mortgage programs, loan processing, and funding capability. These independent loan officers have the advantage of earning a higher sales commission for each loan funded, and the flexibility of working their own hours, at a location of their choice, without any monthly sales quotas, and no company managers monitoring work activity or performance.

The disadvantages of working independently include: commission only, with no salary; health insurance is not provided; loan officer pays full social security tax; no opportunity for promotion; isolation from co-workers; must pay for all advertising or mortgage leads to generate business.

The majority of loan officer jobs are found in the residential market for the purchase of new or resale homes, refinancing, and home equity loan products. Employers include banks, credit unions, mortgage banking companies, and mortgage brokers. 

Commercial loan officers derive their mortgage business from sources such as: commercial real estate companies, corporations, and investors who purchase or refinance real estate for business or investment, including office buildings, apartments, retail centers, and industrial property. 

The earning potential of a loan officer can range from about $50,000 to $150,000 per year, which can depend on many factors, such as: the economy, interest rates, number of new and resale homes sold, home values, commission split, number of sales leads, quality of leads, and sales ability. The industry has frequent business cycles, and a high turnover rate, but can be financially rewarding.   

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